Allstate to sell most of life insurance unit to Blackstone for $2.8 billion

(Reuters) - Allstate Corporation said on Tuesday it had agreed to sell most of its life insurance business to entities managed by buyout firm Blackstone Group Inc for $2.8 billion.

The deal comes as global life insurers are taking steps to curb payouts stemming from the COVID-19 pandemic, including long-term health consequences that are not fully understood.

In the United States, 8% of reported group life insurance claims from April to August attributed the cause of death to COVID-19, according to the U.S. Society of Actuaries.

“Allstate is deploying capital out of lower growth and return businesses while continuing to execute our strategy to grow market share in personal property-liability,” Chief Executive Officer Tom Wilson said.

The company said the unit, Allstate Life Insurance Company, holds about 80% or $23 billion of its life and annuity reserves and reported a net loss of $23 million for the first nine months of 2020.

The deal, which excludes Allstate Life Insurance Company of New York (ALNY), is expected to close in the second half of 2021.

The insurer said it was looking at alternatives to sell or otherwise transfer risk associated with ALNY to a third party.

J.P. Morgan Securities LLC, Ardea Partners LP and Lazard acted as financial advisers to Allstate, while Morgan Stanley & Co. LLC and Credit Suisse Securities advised Blackstone.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Aditya Soni